Chin Company incurred direct materials costs of $75,000 during the year.Manufacturing overhead applied was $70,000 and is applied based on direct labour costs.The predetermined overhead rate is 70%.How much are Chin Company's total manufacturing costs for the year?

Question

Quizplus · Accepted Answer

Total manufacturing costs = direct materials + manufacturing overhead applied
Direct labor costs = (manufacturing overhead applied/predetermined overhead rate) *100
                     = ($70,000/70%) * 100
                     = $100,000
Total manufacturing costs = $75,000 + $70,000 = $145,000 (direct materials + manufacturing overhead)
Total manufacturing costs including direct labor = $145,000 + $100,000 = $245,000. Therefore, the correct option is D.

Chin Company Incurred Direct Materials Costs of $75,000 During the Year.Manufacturing